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From: Glenn Petersen8/20/2021 5:50:26 AM
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Fanatics does not currently have an online gaming presence, though it is rumored to have an interest.

With a Frenzy of Deals, Fanatics Swoops In to Reorder the Trading-Card World

The sports-merchandise retailer’s deals with players in baseball, basketball and football overturn decades-long arrangements with dominant icons like Topps Co.

By Jared Diamond and Andrew Beaton
Bloomberg
Updated Aug. 19, 2021 5:36 pm ET



Topps has been the premier baseball-card manufacturer since the early 1950s. PHOTO: JOHN J. KIM/CHICAGO TRIBUNE/TNS/ZUMA PRESS
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In a sweeping reordering of the trading-card universe, unions representing players in Major League Baseball, the National Basketball Association and the National Football League have struck exclusive agreements with a new company controlled by online sports-merchandise retailer Fanatics Inc., people familiar with the matter said.

The deals break the grip that incumbent icon Topps Co. has held on the baseball-card market since the 1950s. The basketball and football players had deals with Panini America, Inc.

All three unions—the MLBPA, NBPA and NFLPA—will have stakes in the entity that will now have control of the most lucrative sports trading card assets in the country. MLB and the NBA have also struck deals with the new business and will also have a stake.By Jared Diamond and Andrew Beaton
Bloomberg
Updated Aug. 19, 2021 5:36 pm ET

Topps and Panini did not immediately respond to requests for comment.

The MLBPA deal begins in 2023. MLB’s current agreement with Topps runs through 2025. The NBA and NFL unions’ deals run through 2025 and 2026, respectively.

In a memo sent to baseball players Thursday, MLBPA executive director Tony Clark said that his union’s deal is more than 10 times bigger than any deal the union has ever struck. He added that it is part of a series of recent deals that will generate nearly $2 billion through 2045.

The deals figure to have a major impact on the fortunes of an old stalwart of the sports business, Topps, and a newer one that is charging deeper into it, Fanatics. The players and leagues plan to leverage the same expertise that has turned Fanatics into the go-to online retailer of sports gear into a business that makes trading cards more accessible to everyday fans.

Topps, the longtime incumbent in baseball, is in the process of going public through a combination with a special-purpose acquisition company. That deal, with Mudrick Capital Acquisition Corp. II, valued the combined entity at about $1.16 billion, the companies said when they announced the deal in April. Topps released its second-quarter earnings on Wednesday, announcing that sales had increased by 78% and raising its outlook for the year.

Fanatics, meanwhile, has emerged as one of the most aggressive forces in sports merchandising. Its founder, and executive chairman, Michael Rubin, is also the co-owner of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils. The company has partnered with virtually every major North American professional sports league for merchandising sales and lately has signaled its intent to enter areas such as ticketing and online betting.

Fanatics is currently valued at at $18 billion following a new funding round, the Journal reported earlier this month, roughly tripling its valuation from a year ago as it works to expand into new business lines. Rubin will helm the new company.

Topps has been the premier baseball-card manufacturer since the early 1950s, originally packaging the cards with bubble gum. Its 1952 Mickey Mantle card is one of the most iconic and expensive cards ever produced, with one selling for $5.2 million earlier this year. The company remains synonymous with baseball cards to this day.

More recently, baseball cards have exploded in popularity, particularly during the pandemic, when national lockdowns and the hiatus of live sports sent people digging through their attics and basements in search of old cards.

Topps is currently co-owned by the Tornante Company and private-equity firm Madison Dearborn Partners, and its chairman is former Walt Disney Co. chief executive Michael Eisner.

Topps’ dominant position in the baseball business is the result of two separate licensing deals: one with Major League Baseball, which allows Topps to use team logos and trademarks on its cards; and the other with the union, which enables it to use player images.

The combination of the deals allows Topps to produce cards with, for example, Fernando Tatís Jr. wearing his San Diego Padres uniform. (The MLBPA currently has another licensing deal with Panini, which allows the use of player likenesses but not team logos.)



Fanatics founder Michael Rubin is also the co-owner of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils. PHOTO: ALEX TRAUTWIG/MLB/GETTY IMAGES
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Topps paid the MLBPA $20.4 million last year, the most of any MLBPA licensee, according to the union’s annual report to the U.S. Department of Labor. The NFLPA earned $24.2 million from Panini, according to its latest filing.

But now Topps is losing a major partner in MLB and the MLBPA, making its future in the baseball card arena unclear.

The rest of the sports card market is divided up between other players. Panini has exclusive licenses with the NFL and the NBA and their unions, while Upper Deck has an exclusive deal with the NHL and the National Hockey League Players Association.

In his memo, Clark added that players should “continue to honor their commitments and perform any obligations they may have under any valid, extant agreements with Topps and Panini” in the interim.

The NFL, unlike MLB and the NBA, has not struck a deal with the newly formed card company, but that does not preclude the league from doing so before its current deal with Panini is done.

Two years ago, the NFLPA and MLBPA teamed up in an unprecedented private equity deal that helped lay the groundwork for this upheaval. The Journal first reported in 2019 the NFLPA and MLBPA’s creation of OneTeam Partners LLC, which was launched to expand opportunities to license their group name, image and likeness rights. Prominent among those assets: trading card deals.

Write to Jared Diamond at jared.diamond@wsj.com and Andrew Beaton at andrew.beaton@wsj.com

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the August 20, 2021, print edition as 'Fanatics Shakes Up the Card Market.'

With a Frenzy of Deals, Fanatics Swoops In to Reorder the Trading-Card World - WSJ
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